The Damages Directive, reconsidered

Keeping delegates up to date with current developments on the implementation of the EU Damages Directive,...

Keeping delegates up to date with current developments on the implementation of the EU Damages Directive, this session covered the regulators’ perspective as well as national trends in legislation on this area.

The panel consisted of DG Competition’s Emanuela Canetta, Paul Hitchings of Cuatrecasas, Christopher Rother and Laurent Geelhand, both of Hausfeld, as chaired by Stefaan Raes of Liedekerke Wolters Waelbroeck Kirkpatrick, who asked Canetta the simple question: “Is the European Commission satisfied with the way the Damages Directive is being implemented?.”

Broadly, it seems, it is. Canetta updated the audience on the progress of the Directive, the implementation of which was due by December 2016.

Just seven EU member states had transposed the Directive into their respective legal systems by then, leading to the issue of 21 automatic infringement notices by the Commission. As of February 2018, only Greece and Portugal were still to implement the Directive, although both countries were advancing the Directive through their respective parliaments.

Canetta informed her audience that the Commission would be checking the compliance of national legislation via the infringement procedure, looking for trust and completeness, as well as conformity, with the original Directive.

Other work included developing passing-on guidelines and appropriate non-prescriptive guidance on the protection of confidential information and, by 2020, a report by the Commission to both the European Parliament and Council on the implementation of the Directive. Given delays in transposition, she expected more quantative evidence would be due by 2024.

EVENTS IN SPAIN

The panel was then asked to consider “where should actions be brought, and where would defendants want claims to be brought?”

Hitchings gave an overview of current developments in Spain, which had seen for the first time, follow-on claims brought as a direct result of a Commission decision – namely from the Trucks Cartel finding.

He noted that “there is a battle between the different jurisdictions”, and gave examples involving the so-called Italian torpedo (seeking jurisdiction in another court, thus delaying proceedings in Spain), as well as litigation the firm was undertaking in France and the UK.

Spain, noted Hitchings, was compliant with the Directive, albeit provisionally, subject to further consultations, the results of which were being legislated. He noted the legislation had introduced new concepts, such as disclosure, which had led to procedural changes in the Civil Code as a result.

Hitchings said: “This is a whole new ballgame, and it’s going to be fascinating to see how it changes Spanish litigation, which generally [has been] characterised by its simplicity,” and also its speed of decision. He also noted a new rule in the Spanish implementing legislation on the issue of parental liability in civil claims.

There had been a major upturn in damages actions in Spain since the implementation of the Directive, he said: “The Directive has definitely been a catalyst, as people have begun to realise there really is a right to damages, and a lot of law firms are getting involved, and a lot of mass litigation is beginning to happen.”

One such case was the trucks litigation, which Hitchings flagged up as attracting considerable interest in Spain, while he also indicated there was considerable appellate interest in cartel cases, even up to the final appellate level.

Hitchings concluded with an assessment of the costs, jurisdiction, treatment of expert evidence, and case management under the Spanish system, as well as in other EU jurisdictions.

COLLECTIVE ACTION

Geelhand, who splits his time between London and the firm’s Brussels and Paris offices, which he manages, then spoke on the subject of whether private enforcement could be successful without some form of collective action, leaving the implementation of the Directive to one side.

Taking a number of jurisdictions as examples, Geelhand pointed to a number of recent Commission decisions – on car parks and braking systems, to name but two, before returning to the subject of the Trucks Cartel, which, he noted, had potentially up to 700,000 affected individuals and companies as possible claimants.

He explained how Hausfeld had created mechanisms to manage the volume of such claimants, by creating a Special Purpose Vehicle, offering examples from Dutch legal practice, noting that such assignment mechanisms were often subject to challenge.

The idea of a common collective redress mechanism spanning all EU jurisdictions, however, had been challenged by Germany (at the European Council level) in spite of attempts by the Commission to found such mechanisms. As a result, noted Rother, managing partner of Hausfeld in Germany, the Damages Directive was a compromise.

Rother explained the different mechanisms for bundling, whether through claimants – whether through a group action, with individual burdens of proof, which had capacity and capability limitations, as well as compliance issues with Bar rules – or through bundling claims, rather than parties, through third-party assignment.

He gave detailed insights into how the claim, before the District Court of Munich, was constructed, in which 3,200 fleet operators assigned their claims to a service provider, covering 80,000 trucks, which in turn, lead to significant pleading and IT challenges – all of which were overcome.

Rother said: “Management of [such a claim] was a challenge, and without the type of IT support we had it would not have been possible,” before also discussing legal issues in connection with discovery in German legal proceedings.

Keeping to discussion on trucks, Rother pointed to a recent EUR 350,000 judgment in Hanover, Germany, against trucks cartelist MAN, which had awarded damages to the city of Gottingen in principle. While the court found there was liability, because the claim was being brought by a municipality, which used the trucks to provide a public service, pass-on was not applicable, and disclosure issues did not arise.

Geelhand then turned to decisions of the French Competition Authority (Autorité de la concurrence), outlining the approach to expert evidence in French cases, and the importance of economic advice and analysis.

He said: “I always advise clients if you have to go to France, try to go to Paris because there you have a sophisticated court,” whereas country justice ran the risk of being assigned a judge who has “never seen those cases, and doesn’t know what to do”, with the risk being that, absent sophisticated advice or counsel, “they find a way to get rid of the case”.

With Paris, Brussels, and Amsterdam opening new international chambers within their Commercial Courts which will offer hearings and judgments in English, it was mooted: “Will a French judge speaking English be better than a French judge not speaking English?”

Rother said that German courts were already familiar with the use of English in intellectual property cases, but suggested that smaller member states like the Netherlands or Belgium, would be more likely to capitalise on such litigation than Germany, on which note, the panel then engaged in a lively question and answer session, expertly moderated by Raes, showing that European interest in follow-on claims remains keen.

This report is part of CDR’s coverage of its Winter Competition Litigation Symposium. See below for further reports from this event:

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